SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996 Commission File Number 0-14569
SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
(Exact name of small business issuer as specified in its charter)
Maryland 04-2848939
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
One International Place, Boston, MA 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 330-8600
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
<TABLE>
STATEMENTS OF OPERATIONS
- - ------------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, 1996 and 1995
(Unaudited) 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues
Rental income.................................................... $5,625,452 $5,707,444
Laundry income................................................... 130,816 78,489
Interest income.................................................. 31,021 66,299
Other income..................................................... 132,320 43,727
----------- ----------
5,919,609 5,895,959
---------- ----------
Expenses
Utilities........................................................ 1,327,282 1,209,638
Repairs and maintenance.......................................... 436,001 508,346
Taxes............................................................ 436,676 413,915
Salaries......................................................... 614,892 600,648
Operating expense................................................ 281,986 181,106
Administrative expenses.......................................... 97,087 104,543
Bad debt expense................................................. 261,591 169,832
Advertising and rental expense................................... 73,328 82,211
Insurance........................................................ 99,652 141,183
Asset and property management fees............................... 191,721 307,975
--------- ----------
Total operating expenses...................................... 3,820,216 3,719,397
---------- ----------
Other expenses
Interest expense................................................. 1,412,946 1,436,527
Depreciation and amortization.................................... 1,005,504 982,380
---------- ----------
Total expenses................................................ 6,238,666 6,138,304
---------- ----------
Net loss before minority interest...................................... (319,057) (242,345)
----------- ----------
Minority Interest in Net Earnings of
Operating Partnerships .......................................... 22,603 18,218
---------- ----------
Net loss............................................................... $ (341,660) $ (260,563)
=========== ==========
Net loss allocated to general partners................................. $ (17,083) $ (13,028)
============ ==========
Net loss allocated to investor
limited partners................................................. $ (324,577) $ (247,535)
=========== ==========
Net loss per unit of limited
partnership interest............................................. $ (500) $ (381)
============= ============
Weighted average number of units outstanding $ 649 $ 649
============== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
BALANCE SHEETS
- - ------------------------------------------------------------------------------------------------------------------------------------
March 31, December 31,
1996 1995
(Unaudited) (Audited)
- - ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Investment in Real Estate - At Cost
Land............................................................. $ 5,833,466 $ 5,833,466
Buildings, improvements and personal property 87,780,258 87,415,477
------------ ------------
93,613,724 93,248,943
Less: accumulated depreciation.................................. 38,537,639 37,586,954
------------ ------------
55,076,085 55,661,989
Other Assets:
Cash and cash equivalents........................................ 1,529,763 1,561,098
Tenant accounts receivable....................................... 328,671 470,872
Tenant security deposits - funded................................ 414,868 383,467
Escrows and reserves............................................. 3,702,578 3,392,301
Prepaid expenses and other assets................................ 737,733 1,004,695
Deferred costs, less accumulated amortization
of $652,275 and $597,456 as of
March 31, 1996 and December 31, 1995
respectively................................................... 1,651,530 1,706,349
------------ ------------
TOTAL ASSETS..................................................... $ 63,441,228 $ 64,180,771
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgage payable................................................. $ 60,581,049 $ 60,866,515
Other Liabilities:
Due to affiliate.............................................. - -
Accounts payable and accrued expenses 749,201 914,894
Tenant security deposits payable.............................. 302,793 272,120
------------ ------------
61,633,043 62,053,529
MINORITY INTEREST (Note 1)............................................. 2,107,253 2,084,650
------------ ------------
PARTNERS' EQUITY:
Investor Limited Partners, Units of Investor
Limited Partnership Interest, 649 units
authorized and outstanding ................................... 2,575,299 2,899,876
General Partners................................................. (2,874,367) (2,857,284)
------------ ------------
(299,068) 42,592
------------- ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY................................. $ 63,441,228 $ 64,180,771
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS
- - ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31,
1996 1995
Unaudited Unaudited
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net loss......................................................... $ (341,660) $ (260,563)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Minority Interest in Net Earnings of
Operating Partnerships.................................... 22,603 18,218
Depreciation.................................................. 950,685 927,561
Amortization.................................................. 54,819 54,819
Changes in assets and liabilities:
Decrease in tenants accounts receivable 142,201 249,249
Net security deposits received (paid) (728) (1,028)
Increase in escrows and reserves.......................... (310,277) (723,059)
Decrease in prepaid expenses and other assets 266,962 (87,733)
Decrease in due to affiliates............................. - (21,375)
Increase (decrease) in accounts payable and accrued expenses (165,693) 158,920
------------ ------------
Net cash provided by operating activities 618,912 315,009
----------- ------------
Cash flows from investing activities:
Acquisition of and improvements to properties (364,781) (87,154)
------------ ------------
Net cash used in investing activities.................................. (364,781) (87,154)
------------ ------------
Cash flows from financing activities:
Principal payments on mortgage................................... (285,466) (188,561)
Distributions to partners........................................ - (1,366,316)
----------------- ------------
Net cash used in financing activities.................................. (285,466) (1,554,877)
------------ -----------
Net decrease in cash and cash equivalents (31,335) (1,327,022)
Cash and cash equivalents, beginning of period 1,561,098 3,123,638
------------ ------------
Cash and cash equivalents, end of period $ 1,529,763 $ 1,796,616
============ ============
Cash paid for interest................................................. $ 1,412,946 $ 1,436,527
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN PARTNER' EQUITY
- - ------------------------------------------------------------------------------------------------------------------------------------
Units of
For the Three Months Ended Limited General Limited
March 31, 1996 and 1995 Partnership Partners' Partners' Total
(Unaudited) Interest Capital Capital Capital
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 649 $(2,857,284) $ 2,899,876 $ 42,592
Distributions - - -
Net loss (17,083) (324,577) (341,660)
---------------- ----------- ----------- -----------
Balance, March 31, 1996 649 $(2,874,367) $ 2,575,299 $ (299,068)
============ =========== =========== ============
Balance, December 31, 1994 649 $(2,730,932) $ 5,300,556 $ 2,569,624
Distributions (68,316) (1,298,000) (1,366,316)
Net loss (13,028) (247,535) (260,563)
--------------- ----------- ----------- -----------
Balance, March 31, 1995 649 $(2,812,276) $ 3,755,021 $ 942,745
=========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
1. ACCOUNTING AND FINANCIAL REPORTING POLICIES
The consolidated financial statements included herein have been
prepared by the Registrant, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. The Registrant's accounting and
financing reporting policies are in conformity with generally accepted
accounting principles and include all adjustments in interim periods considered
necessary for a fair presentation of the results of operations. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. It is suggested
that these consolidated financial statements be read in conjunction with the
financial statements and the notes thereto included in the Registrant's latest
annual report on Form 10-K.
The accompanying consolidated financial statements include the accounts
of the Partnership and the Operating Partnerships prepared on the accrual basis
of accounting. Theodore N. Lerner's ownership in the Operating Partnership's has
been reflected as a minority interest in the accompanying consolidated balance
sheets and statements of operations.
All significant intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements reflect the
Partnership's results of operations for an interim period and are not
necessarily indicative of the results of operations for the year ending December
31, 1996.
2. TAXABLE LOSS
The Partnership's taxable loss for 1996 is expected to differ from that
for financial reporting purposes primarily due to accounting differences in the
recognition of depreciation incurred by the Operating Partnerships.
3. INVESTMENT IN OPERATING PARTNERSHIP
The following summarizes the results of operations for the Operating
Partnerships:
<TABLE>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Income:
Rental income $ 5,625,452 $ 5,707,444
Interest and other income 274,419 146,400
------------- ------------
$ 5,899,871 $ 5,853,844
=========== -----------
Expenses:
Depreciation and amortization $ 950,685 $ 927,561
Operating expenses 2,772,987 3,156,626
Taxes and insurance 669,326 555,098
------------- ------------
$ 4,392,998 $ 4,639,285
----------- -----------
Net income $ 1,506,873 $ 1,214,559
=========== ===========
</TABLE>
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
Springhill Lake the "Partnership", has invested as a general partner in nine
limited partnerships (collectively, the "Operating Partnerships") and as such,
receives distributions of cash flow from the Operating Partnerships and is
responsible for expenditures consisting of (i) interest payable on the New
Mortgage Loans (ii) administrative expenses and (iii) fees payable to affiliates
of the General Partners. Each Operating Partnership owns a section of a garden
apartment complex in Greenbelt, Maryland (the "project"). The General Partners
believe that funds distributed by the Operating Partnerships to the Registrant
will be sufficient to pay such expenditures. The Operating Partnerships' cash
and cash equivalents experienced a $31,335 decrease at March 31, 1996 as
compared to December 31, 1995. The decrease was due to $618,912 provided by
operating activities, which was partially offset by $364,781 used in investing
activities and $285,466 used for principal reduction to the mortgage payable. At
March 31, 1996, the Operating Partnerships' cash reserves were $1,529,763. The
Partnership also has a cash replacement reserve account held by its lender. At
March 31, 1996, the balance in the account was $2,728,774. All other increases
(decreases) in certain assets and liabilities are the result of the timing of
receipt and payment of various operating activities.
The Partnership resumed making cash distributions to Limited Partners in 1995.
The Partnership intends to continue to limit cash distributions to fund the
capital improvements and reserves required for the Project. However, the
performance of the Partner's interest in the Project and its distribution policy
will continue to be reviewed on a quarterly basis.
Results of Operations
The Partnership operated at a net loss of $341,660 for the three months ended
March 31, 1996, compared to a net loss of $260,563 for the three months ended
March 31, 1995. Excluding non-cash items such as depreciation and amortization,
however, the Operating Partnership generated positive cash flow, which was used
to make improvements to the property and principal payments on the loans
encumbering the properties.
The Operating Partnerships' revenue was essentially constant for the first
quarter of 1996 compared to the first quarter of 1995. The property's average
rents increased by 13.5% since the first quarter of 1995, but this increase was
offset by a substantial increase in the amount of concessions offered to new
tenants. The property's average occupancy remained stable at approximately 91%.
The direct operating costs of the Operating Partnerships' property increased by
2.9%, primarily as a result of higher costs associated with utilities. Due to
the extreme winter weather conditions heating costs were abnormally high. Also,
increases in bad debt and operating expense were offset by a reduction in asset
and property management fees. The Operating Partnerships' interest expense and
depreciation and amortization expense were consistent with the results for the
same period in 1995.
The Washington, D.C., area apartment market is stable but remains competitive.
The Partnership continues to make capital improvements to the property to
enhance its competitiveness within the local market. The Partnership spent
$364,781 on capital improvements during the first quarter of 1996 compared to
$87,154 in the first quarter of 1995. Improvements included replacing appliances
and bathroom tile in apartment units. Most of the capital improvements are
funded by replacement reserves held by the mortgage lender, with the balance
being funded from operations. The balance of the replacement reserves was
approximately $2,728,774 at March 31, 1996.
The results of operations in future quarters may differ from the results of
operations for the quarter ended March 31, 1996, due to inflation and changing
economic conditions which could affect occupancy levels, rental rates and
operating expenses.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report.
b) Reports on Form 8-K: None
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SPRINGHILL LAKE INVESTORS
LIMITED PARTNERSHIP
By: Three Winthrop Properties, Inc.
Managing General Partner
By: /s/ Michael L. Ashner
Michael L. Ashner
Chief Executive Officer
By: /s/ Edward V. Williams
Edward V. Williams
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from unaudited financial statements for the
three month period ending March 31, 1996 and is
qualified in its entirety by reference to such financial
statements
</LEGEND>
<CIK> 0000763399
<NAME> SPRINGHILL LAKE INVESTORS LIMITED PARTNERSHIP
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 1,529,763
<SECURITIES> 0
<RECEIVABLES> 328,671
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,858,434
<PP&E> 93,613,724
<DEPRECIATION> 38,537,639
<TOTAL-ASSETS> 63,441,228
<CURRENT-LIABILITIES> 1,051,994
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (299,068)
<TOTAL-LIABILITY-AND-EQUITY> 63,441,228
<SALES> 0
<TOTAL-REVENUES> 5,919,609
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,825,720
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,412,946
<INCOME-PRETAX> (341,660)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (341,660)
<EPS-PRIMARY> 500.00
<EPS-DILUTED> 00.00
</TABLE>
